Weatherford net falls 79% on drilling slowdown

Oil service firm sees uptick in North America from Q2

By

SteveGelsi

NEW YORK (MarketWatch) -- Weatherford International Ltd. shares fell Monday ater it said its third-quarter net income fell 79% as the Geneva-based oilfield-service company's business contracted in North America during the global recession.

Weatherford International
WFT, +0.75%
said earnings dropped to $77.4 million, or 11 cents a share, compared with $370.6 million, or 54 cents, in the year-earlier quarter.

Excluding 2 cents a share for costs incurred in connection with its withdrawal from sanctioned countries and severance, Weatherford earned 13 cents a share.

The figure of 13 cents a share includes a one-time tax benefit of 5 cents a share, and a loss of 2 cents a share for foreign currency exchanges, as well as $27 million boost from an accounting item.

Revenue fell to $2.15 billion from $2.54 billion.

A survey of analysts by FactSet Research produced a consensus earnings estimate for the quarter of 13 cents a share. Weatherford fell slightly short of the revenue estimate of $2.16 billion.

Shares of Weatherford fell 3.2% to $19.92.

Pritchard Capital analyst Mark Brown said he expected Weatherford shares to weaken on Monday on an apparent earnings miss on an operating level.

"Overall, this was a mixed quarter, as expected, but we expect the company's long-term prospects remain intact and would represent a buying opportunity if shares pull back," Brown said.

The company's global rig count fell 39% in the quarter compared with a year earlier.

"North America was primarily responsible for the decline," Weatherford said.

North American revenue dropped 47% to $620 million, while rig count fell 52% in the face of a glut in natural gas supply and a move by drillers to cut capital spending to conserve cash.

While the tough times continued in the third quarter, revenue climbed 9% in North America from the second quarter, providing further proof after Halliburton's
HAL, +0.09%
earnings that the worst may be over in the oil service sector.

In the Middle East and Africa, revenue fell 6% to $600 million. In Latin America, revenue rose 67% to $525 million.

Analysts at Tudor Pickering Holt said the company's operating earnings missed their estimates.

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